Yesterday I reported on the male hegemony of the three chairs of the advisory groups for the Automatic Review. There is a little diversity in the composition of the rest of the group.
It’s comforting to see familiar names who have been involved in auto-enrolment from the early days, but this is still an exclusive group with a bias towards policy and inexperience with practice.
The organisations making or breaking auto-enrolment in the next five years are not represented. Payroll has no rep, nor the small accountants who will take liability for much of their payroll bureau’s work. Nor is their anyone with an advisory hat on (at least with regards the employer’s duties with regards pensions.
It is good to see the Terms of Reference talking about balancing the needs of employees with the costs to employers (and minimising costs to employers. But it is not obvious that any of the Chairs or panels have any idea what small employer costs really are.
Enough on composition – what of proposition?
Closer reading of the question the review is to answer has not resulted in any greater excitement for it. I spoke with one payroll guru yesterday who has responded to all AE consultations from the outset. He told me he was inclined to ignore this (major) review altogether.
The central theme is of engagement. The review is asking how we can get people to fall in love with workplace pensions. But it doesn’t use those words, instead it uses the periphrastic phrasing of the civil service.
The appropriate response is to be found on our heard on our football terraces
“you what, you what , you what you fuckin what!”
If the review is going to be conducted in these terms it will be completely irrelevant to the needs of ordinary employers and their ordinary people. It is a simple business saving money; you start with nothing and get to a point when you have a meaningful amount. We often think that amount is when you can buy a reasonably priced family car with the proceeds.
This is well known and has been discussed ad nauseam in conferences decades in decades out. We have a market based auto-enrolment system, the market is intent on increasing member engagement so it can have economically viable auto-enrolment products.
What is needed is clear products which do what they say on the tin. Cleaning up the mess of cheating practices that has marred Dc pensions since the 70s should be the top priority of this review. Instead product (as in a chat about the level of the cap and what it should include) is kicked into the long-grass.
Similarly, the role of the fiduciaries – the people we trust – to make sure member’s interested are represented, is not on the agenda. I trust people like Nigel Stanley and Jocelyn Blackwell to act for the consumers and it’s good to see Jane Vass speaking up for the older worker (and those beyond work). But there is no talk in the TOR or the questions, about how trustees and IGCs can be promoted as savings champions. There is instead a very dangerous couple of paragraphs.
In amongst this gobbledegook is a ministerial project waiting to get out. Jo Cumbo is not prone to speculation
This is the kind of nonsense that happens when effective lobbyists get in minister’s ears. The idea that the SIPP providers (who are undoubtedly behind this) can disrupt the orderly progress of people into employer chosen workplace pensions is very attractive and very dangerous.
It is attractive, because it plays to the libertarian right (who brought us personal pensions, freedom of choice and now “other savings” such as the ISA family. It is hugely attractive for the SIPP providers (Hargreaves Lansdowne especially) as it makes them inheritors of the wealth of auto-enrolment (without having to do the nurturing).
It is of course not helpful to ordinary savers at all. They do not want SIPP functionality, they do not want to be choosing their providers – they never have and never will.
A thoroughly bad idea
And of course this dangerous and silly idea would make payroll’s into provider hubs. Payroll are not designed to be carousels for the delivery of profits to financial services providers. Member choice of provider should not be on the agenda.
The hijacking of auto-enrolment by those with an “engagement agenda” is a very real danger arising from the lop-sided composition of this review.
Instead of providing greater freedom, this review should be providing greater member protection. I fear this review is designed to open the door to many of the bad practices that we have been banishing from workplace pensions, over the past five years.